- Medicare enrollment is open and insurers are making changes, increasing costs for some.
- Medicare is a key health insurance source for older Americans, often linked to Social Security.
- These changes come as many boomers struggle to keep up with bills and rising costs.
Older Americans relying on Medicare for their health insurance might be in for a costly surprise next year.
Many insurers are making significant changes in 2025. Deductibles and prescription drug costs will become more expensive for some Medicare recipients — and it could impact whether older Americans can afford healthcare.
Insurance company mergers and closures are contributing to shifting Medicare plans and prices. Companies like Aetna or AARP/UnitedHealthcare are merging their coverage plans, while previous insurers like Mutual of Omaha are leaving the market. That’s leading to fewer — and sometimes pricier — options for Medicare recipients.
“When plans end or a merger happens, Medicare enrollees can be impacted in two noticeable ways,” Elizabeth Ayoola, personal finance writer at NerdWallet, said in a statement to Business Insider. “In the case of the former, enrollees may be left vulnerable without coverage and scrambling to find a new plan. In the event that a merger happens, enrollees could end up auto-enrolled into a plan that’s no longer a good fit.”
Millions of older Americans depend on Medicare to pay for services like prescriptions and doctor visits. The federal insurance plan — which is often tied to Social Security and typically applies to people over 65 — is many baby boomers’ main source of health coverage.
Like other health insurance programs, recipients have a yearly enrollment period. Eligible Americans can now join, drop, or switch their supplemental Medicare plans through December 7.
Ayoola told BI that if beneficiaries don’t take action to adjust their health insurance plans before December 7, they could soon see higher out-of-pocket costs, reduced care options, or more limited drug coverage — issues that can’t be resolved after the enrollment period closes. However, some beneficiaries will see price increases or loss of coverage regardless.
“For people who are budgeting, open enrollment is especially important,” Ayoola said. “Because it’s a time to do comparison shopping and essentially see if you can find a cheaper plan somewhere else.”
Medicare changes on the horizon
An estimate shared with BI from Healthpilot, a technology platform that helps customers choose Medicare plans, suggests that millions of older Americans could lose part of their Medicare benefits in 2025.
Healthpilot estimates that there will be 1.5 million people impacted by Medicare Advantage plan cancellations and 3.5 million impacted by prescription drug coverage cancellations, due in part to insurance consolidation. Former beneficiaries of those plans will need to find new coverage to replace them next year.
The Medicare program has a few different branches: Parts A and B act as stand-alone health insurance programs and cover all types of inpatient and outpatient care, while Part D programs typically cover prescription drugs and basic provider visits as a supplement to people’s private insurance plans.
Part C, also known as Medicare Advantage, allows seniors to join plans that are offered by private companies but are governed by Medicare rules. Advantage plans have their own caps on how much patients can spend out of pocket, and those numbers change annually.
While beneficiaries with Part A and B Medicare could see premium adjustments, most major changes will occur for people with supplemental Part D and Medicare Advantage plans.
An increasing number of Medicare Advantage and prescription drug plans are setting their deductible, or the amount of out-of-pocket costs patients are on the hook for before the plan kicks in, at the maximum allowed amount. Healthpilot found that 10% of Medicare Advantage plans will be at the maximum deductible — up from 5% last year.
Most Medicare Advantage beneficiaries will still have prescription drug coverage in the new year, but they may face higher out-of-pocket costs.
In total, the number of Medicare Advantage plans with drug benefits is largely holding steady, dropping 2%. But within the group of Medicare Advantage plans that still have drug benefits, the number of $0 deductible plans will be cut in half — meaning more plans with prescription drug coverage will have higher out-of-pocket costs upfront.
To be sure, not all older adults will be negatively affected by the changes. Some might also have employer-sponsored or private healthcare coverage outside of Medicare, or have plans that aren’t changing. But for the Americans who are impacted, the changes could mean healthcare becomes even more of a financial strain.
Baby boomers are already struggling with healthcare costs
These changing Medicare costs come as many low-income baby boomers are struggling to keep up with medical bills. Two older Americans shared with Business Insider their fears for what could happen if their out-of-pocket costs rise in the new year.
Lisa Callejas is worried about what would happen if her husband got sick next year. If that happens, they might not be able to afford treatment — her husband’s Medicare out-of-pocket costs will go up to $14,000 from around $9,500.
“It means we better not get sick,” she said.
Callejas, 55, and her husband moved to his native Mexico over the summer to save money. Their son died in January, and Callejas’ husband, who worked with their son in the family business of home remodeling, can no longer do the manual labor necessary to keep operations running.
Additionally, the rising cost of living made it increasingly difficult to stay in the US on a lower income. They’re living off the money they made from selling their house in the US and her husband’s small Social Security benefits, but fearful of 2025.
Betty, similarly, goes to her dialysis appointments three times a week. She was diagnosed with kidney disease and other conditions a few years ago, forcing her to retire early from her steady job in health communications. Betty — who chose to use her first name for privacy but whose identity was verified by Business Insider —lives on her $1,848 monthly Social Security disability payments in southwest Illinois.
The 61-year-old said she qualifies for both Medicare and Medicaid, but still pays a couple hundred dollars each month in healthcare expenses, in addition to her monthly $174 premium.
Betty isn’t sure yet if her Medicare premiums or deductibles will rise in the new year. If they do, she says she can’t afford it. She already struggles to afford housing, groceries, utilities, and the car she needs to travel to her dialysis appointments.
“Something as small as $20, I can’t even imagine,” she said. “I had about $10 left over for this month — but that was because I had to sell some jewelry that my mom picked out. I had to sell it in order to make the bills this month.”
Low-income baby boomers like Betty and the Callejas family might feel the greatest hurt from increased Medicare prices, Ayoola said, and these healthcare costs can derail retirement and long-term finances.
Regardless of financial health, Ayoola suggested older adults talk to a Medicare expert or wealth advisor before choosing a 2025 plan.
“We can’t predict the future and we don’t know which direction our health is going to go in,” Ayoola said. “It’s a good idea, no matter where your health is today, to always try your best to budget for health care expenses and look for ways to cut costs.”
Are you struggling to live on a fixed income in retirement? Are you open to sharing how it has impacted your healthcare access? If so, reach out to [email protected] and [email protected].